Foreword by Jamie Hepburn MSP

The
UK Government will
introduce the
UK Apprenticeship Levy in
April 2017. As a result, employers across private, third and public
sectors will be required to pay 0.5% of their paybill in excess of
£3 million pounds to Her Majesty's Revenue and Customs.

The Apprenticeship Levy is a new way of the
UK Government raising
funds directly from larger employers, a policy they announced in
2015 without consultation with the Scottish Government or
employers, despite apprenticeship policy being a fully devolved
matter. While the Apprenticeship Levy will be a new tax on
employers, its proceeds will largely be replacing existing
apprenticeship funding in England, of which Scotland will receive a
proportionate share.

While the levy will result in a small increase in the funding we
received from the
UK Government previously
in relation to apprenticeship activity, the fact that the public
sector is required to pay will reduce Scottish Ministers' spending
power by £30m in 2017-18. This is against the backdrop of
wider austerity measures being imposed by the
UK Government resulting
in continued reductions in budgets for public services and a
failure to revive the economy.

From the outset the Scottish Government has undertaken extensive
engagement and consultation from employers to understand the impact
that the levy will have, but also how they would like Scottish
Ministers to respond.

Following the conclusion of our recent consultation we published
the independent analysis of the responses which showed broad
employer support for all of the options we consulted on. This
report now sets out how we plan develop a distinctly Scottish
approach to apprenticeships and wider skills development and drive
closer engagement with industry in our efforts to enhance
productivity and economic growth in 2017-18 and beyond.